Question

Discuss the essential elements of an enforceable contract and the significance of each element. Describe a contract, possibly one in which you were a party, were involved, or of which you have personal knowledge, indicating whether the contract was express, implied, written or oral, and whether it was it breached or disputed. Did it contain the essential elements of enforceability? Did you learn anything from this experience, and if so, what would you do differently in entering into future contracts?

Answer 1

In day to day life, people make contracts like rental agreements, selling properties, employment contracts etc. In order to be enforceable, a contract must have the essential elements. It can be oral or written. The most important difference between oral and written contracts is the limitation of deadlines for filing lawsuits about the contract. It may be difficult to enforce a verbal or oral contract unless the terms can be proved or are agreed by both parties. The provision of the written contract with a signature that contains the essential elements minimizes this risk.

Types of Contracts

• Contracts under Seal
• Express Contracts
• Implied Contracts
• Executed and Executory Contracts
• Bilateral and Unilateral Contracts
• Unconscionable Contracts
• Adhesion Contracts
• Aleatory Contracts
• Void and Voidable Contracts

The Essential Elements of an Enforceable Contract
There are six basic requirements/ elements in a legally enforceable contract:

·        An offer

·        An acceptance

·        Competent parties who have the legal capacity to contract

·        Lawful subject matter

·        Mutuality of obligation

·        Consideration.

Offer

An offer is a commitment that expresses the willingness of one party on certain terms and conditions to contract with another party and will become binding when accepted by the person to whom it is offered. It can be made by a letter, email, or verbally. An offer must contain the intention to enter into the contract and its communication to the prospective offeree.

Acceptance
Acceptance is the final and unqualified expression of consent to accept the terms of an offer. It must be done by the person to whom it is made unless an authorized agent is appointed and must be made in the manner requested by the offering party. If the party to whom the offer is made is not agreeing with it she/he can reject the initial offer and can make a counteroffer that may or may not be accepted by the other party.

Competent Parties
Both the parties to a contract must be competent to enter into an enforceable contract. They are deemed to have the capacity to contract.

Lawful Subject Matter
The subject matter should be lawful or it should not violate public policy. Example: the contract must not be on a trade of habit-forming drugs or goods.

Mutuality of Obligation
Both the parties must assent to the same matter, in the same sense, and at the same time. If any party has been fraudulently misled about the terms and conditions of the contract by the other party, the contract is voidable.

Consideration
Consideration can be money or a promise and it must be clearly agreed upon by both parties to the contract. It can be anything of value, tangible or otherwise, received from a recipient of the promise. Any enforceable contract requires consideration. The provision of consideration differentiates a contract from a gift.

Breach of Contract

The failure to follow all or some part of a contractual duty constitutes a breach of contract. It can be intentional or unintentional. It can occur when one part fails to perform or when one party prevents the performance of the other party. It can occur as a total, major, material, or substantial breach of contract. The types of breach are significant in determining the kinds of remedies and damages available to the aggrieved party.

Remedies

Damages: It signifies a sum of money awarded as a compensation for harm caused by a breach of contract. The type of breach depends on the extent of the damages to be awarded.

Reformation:

Reformation is an equitable remedy used when the written agreement formulated does not correspond to the contract that was actually formed by the parties. It can occur as a result of fraud or mutual mistake in drafting the original document.

Rescission:

Rescission terminates the contract. The parties are restored to the position of never having formulated the contract in the first place.

Restitution:

Restitution restores the injured party to the position that they occupied prior to the formation of the contract.

Specific Performance:

Specific performance is an equitable remedy in which the contracted party is required to execute, possible promised performance when monetary damages would be invaluable to compensate for the breach.

While entering into a contract like the most common one as rental agreement I must keep the essential elements in mind.